Accidental Death & Dismemberment Insurance

Instructor: LeRon Haire
In this lesson, we will define the term accidental death and dismemberment along with providing a summary of what it all entails, including its benefits, terms/acceptance criteria, and limitations.

A Summary of Accidental Death and Dismemberment Insurance

Traffic accidents are an example of some of the types of accidents covered by AD&D insurance.

Several of today's jobs consist of not only hard work but dangerous work as well. Jobs such as construction work, painting, and being an electrician all hold a considerable amount of risk. This risk can be minimized (financially) with an insurance rider (add-on) called accidental death and dismemberment (AD&D).

The accidental death and dismemberment insurance rider is in place to help provide specific insurance benefits covering death by accident or dismembering, which is the loss of a body part or function. AD&D insurance can be extremely complicated and difficult to understand without the proper guidance. Let's take a closer look at the benefits, terms/acceptance criteria, and limitations for accidental death and dismemberment insurance.

AD&D Benefits

Accidental death and dismemberment insurance has several benefits. To begin, the premiums for AD&D insurance is typically low, especially if an organization is going to pay for employee coverage. Since accidental death and dismemberments rarely occur, they cost less in comparison to other term life coverage with similar limits. For those individuals working in hazardous jobs, this is a very attractive benefit, whether it is on a voluntary or involuntary basis.

Another benefit of accidental death and dismemberment insurance is the fact that it has the option to be offered to workers as a stand-alone policy or a group term life policy. Typically, if purchased as a rider to a term life policy, the accidental death and dismemberment insurance will allow for double indemnity, which provides twice the death benefit for beneficiaries listed on the insurance.

Accidental death and dismemberment insurance is also a benefit for workers that are just starting in the workforce. From a statistics perspective, younger workers are currently more prone to pass away from a tragic or freak accident as opposed to illness. Due to having a feeling of invincibility, many young workers just entering the workforce do not sign up for the AD&D insurance. This option should be very appealing to those working in hazardous environments that are looking to protect their loved ones in the event of a tragic accident.

AD&D Terms

The terms for accidental death and dismemberment can be quite confusing. The terms can be broken down into two parts: death and dismemberment. For any accidental deaths, the terms may state that this insurance would pay if a death occurs unexpectedly. This means that to pay the policies face amount, the death is not permitted to be caused by sickness, any type of illness, or for any lack of physical condition. These terms also include death by stroke, heart attack, or any type of ailment. Several of these policies exclude payment for death suicide as well.

There is also a time limit on any deaths which are caused by an accident. For example, if an individual is involved in an accident that has caused their death, the accidental death and dismemberment terms will only pay the death benefit if the death occurs within a specific time frame, which is often 90 days from the time of the accident. The death by accident must also be a direct result of the accident.

The terms for the dismemberment portion of the AD&D insurance can also be quite puzzling. For the benefit to pay, it must specify the body part or function that it will pay for if lost. For example, if a policyholder loses an arm while on the job, the policy may pay either half or all of the death benefit, depending on what has been stipulated in the policy.

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